Service stations owners often desire to offer their customers a choice of gasolines such as regular, mid-grade and premium gasolines. In most cases, they prefer that the higher grades be proprietary blends or include proprietary or at least advantageous additive packages to provide for better performance, lower emissions or fuel economy. Unfortunately, the economics of gasoline distribution sometimes argues against offering such a slate of products.
Historically, where a refiner produced a proprietary premium grade gasoline product at its refinery, that material was segregated in the pipeline distribution system so that it could be delivered to the terminal as the proprietary premium grade product. The proprietary product then would be stored in segregated tanks at the terminal, and shipped from the terminal as required by individual service stations.
In this case, for a refiner to offer a proprietary premium gasoline, the refiner must have adequate refining capacity to produce the proprietary gasoline, must pay to have the entire volume of proprietary gasoline shipped to terminal, must store the entire volume of the premium gasoline batch at the terminal for distribution, and must distribute truckloads of the proprietary gasoline to the service station.
The cost of transporting a segregated proprietary fuel through a pipeline can be high. Each interface between a segregated proprietary fuel and more typical fungible material makes pipeline operation more difficult requiring pipeline operators to expend greater resources to transport the segregated product. In addition to pipeline costs generally proportional to the volume of segregated product, some segregated product is lost in the interfacial volume of material that generally separates a proprietary product from the more typical fungible material shipped through the pipeline.
Additionally, maintaining tankage sufficient to store large volumes of a proprietary gasoline at a terminal incurs still more capital and operational expense.
Furthermore, the recent use of hygroscopic gasoline oxygenates such as ethanol also has affected the historical role of terminals. Because of ethanol's affinity for water and the resulting potential for water contamination and related corrosion, it is highly desirable to ship an unfinished gasoline to a terminal for terminal blending with ethanol, thereby keeping ethanol from the refinery and pipeline environment. Terminal blending large volumes of proprietary products also places additional logistical and capital demands on a terminal.
While fungible pipeline premium gasolines offer an alternative to some of the disadvantages noted above, selling fungible premium fuels often can be undesirable from a marketing and performance standpoint for at least two reasons. First, the competitive advantage of providing the consumer a proprietary fuel product and its distinctive performance advantages is lost when a fungible product is sold. Second, the quality of the fungible product may not possess the quality or performance advantages that a fuels marketer may wish to promote.
Thus, while it remains desirable to offer a slate of proprietary or differentiated fuel products to gasoline consumers, what is needed is a way to minimize the costs associated with the manufacture and distribution of a variety of gasolines, preferably with characteristics as good or better as fungible mid-grade or premium gasolines.